Taxation: 1688-1914

By O'Brien, Patrick | History Review, March 1997 | Go to article overview

Taxation: 1688-1914


O'Brien, Patrick, History Review


Taking a cue from Hume and quotations from Adam Smith, liberal historians have represented British taxpayers as 'afflicted' between 1688 and 1815 from the depredations of a Military Fiscal State.[1] Thereafter, and with the 'waning of old corruption', they are said to have prospered from the lighter burdens imposed on their incomes by Victoria's laisser faire cabinets. Do these depictions capture anything illuminating about the costs and benefit of the Hanoverian and Victorian governments who ran the kingdom between 1688 and 1914?

States without income are without power. Thus records of total taxes collected from the population can be used to represent not merely the burdens imposed on taxpayers but the evolving capacity of the state to fund the policies of kings and their ministers.

For centuries revenues emanated from three sources: from land, including mines, buildings and other property owned by monarchs; taxes sanctioned by Parliament, which granted sovereigns legally enforceable rights to impose levies upon the wealth, incomes or expenditures of their subjects; and loans that monarchs raised provided they could convince their creditors that they possessed sufficient wealth or could guarantee to find taxes to repay royal debts and to service outstanding loans by meeting their interest bills.

Before the Glorious Revolution

Between the reigns of Henry VII and William III, the incomes of English monarchs consisted overwhelmingly of taxes, levied with the consent of Parliament on their loyal but (when it came to paying up) not so loyal subjects. Throughout these centuries income from the crown estate declined in relative terms from around 35% of the total before the Civil War to less than 10% by the late 17th century. Henry VIII jacked up his `take' by expropriating church property and debasing the coinage in the 1540s. Nevertheless, English kings never 'lived off their own', nor financed more than small fractions of their expenditures from the forcible expropriation of ecclesiastical or private property. In short they depended upon taxation.

For most of the Tudor and Stuart periods, taxes showed no discernable tendency to rise when measured in constant price terms. Furthermore, the 'real' amounts of tax revenue transferred to the state, per head of population, declined from a high point in the mid 16th century and remained roughly constant down to the time of the Restoration. Shares of national income spent by royal governments probably rose up into the 4%-6% range during wars but fell back to 2%-3% in times of peace. Measured in terms of 'capacity' to appropriate taxes the Tudor and Stuart states look vulnerable to attack by hostile European powers. By the standards of the 18th and 20th centuries, they seem underfunded. Structural change occurred only in the wake of the Glorious Revolution, which in outcome marks a revolution in English fiscal history.[2]

The rise of an imperial power 1688-1815

That measurable discontinuity was the product of two wars fought by William and Anne, supported by their Parliaments against Louis XIV and his allies from 1689-97, and again from 1702-13. Both turned out to be extremely costly but resulted in a permanent enlargement of the fiscal capacity of the state to levy taxes upon a population that had for centuries displayed recalcitrance towards demands for money from ministers of the crown.[3] On behalf of taxpayers, had not Parliament engaged in civil war with Charles I in order to resist, amongst other things, his demands for Ship Money, a direct tax, sensibly earmarked for investment in the royal navy?

After centuries of dispute between monarchs and their Parliaments over money, between 1689 and 1713 a dramatic upswing occurred in the taxes collected and loans raised by the 'King in Parliament'. For example, just before he fled to France, the last Stuart appropriated roughly 3% to 4% of England's national income as taxes, spent about 2 million [pounds sterling] on the army and navy and carried a royal debt of roughly the same amount. …

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